Pacita's Quick Bytes of Real Estate: August 2008

As many times as I've written offers on REOs, I enountered an REO agent who included with her disclosures a guide on writing an REO offer. She requested that the agent initial and return the guide to her so that everyone is clear on what to expect.

After reading her guidelines, I put together a Bullet-point summary that I am sharing with my buyers as further testimony of the importance of writing the BEST and HIGHEST offer. A lot of the do's and don't can apply to writing offers on REO, short sales, and regular sales.

REMEMBER

• Seller/Lender calls all the shots
• Offer is negotiated with an asset manager
• Some terms may be deleted from the formal contracts mandated/sanctioned/prepared by the State Association of REALTORS
• Conversely, some terms may be added by the Lender that may not be familiar to the Agents
• Review these guidelines with the Buyer
• Seller/Lender likely has two or more Broker Price Opinions (BPO) and appraisals so they have a clear idea of what the property is worth
• Seller/Lender are not interested in even looking at seriously low ball offers
• Seller/Lender may prefer using Title or Escrow Company of their choice. In some cases, Seller/Lender may pay some escrow and closing fees.
• Seller/Lender is exempt from providing real estate transfer disclosure statements and may not sign any or all disclosures. Seller/Lender relies on selling and listing agents to provide visual inspections.

DO:

• Submit offers with the following:
  • Pre-approval letter. If you are required to get an additional pre-approval letter by the Seller's Banks, DO submit a pre-approval letter from the Lender you are planning to use as well
  • Verification of Funds. Don't wait for the Seller to request it. Just go ahead and include it.
  • Good faith deposit check. Include photo copy. If Seller requires using their own title company, your buyer can write another check payable to the selected title company.
  • Other documents that the Listing Agent/Seller specifies should be included with the offer. Some Seller/Lender require Addendum specific to REOs. Read carefully as there is often a per diem late fee assessed for late closings and terms on that addendum that will supersede contract terms.
• Be aggressive with your time contingencies. 0-10 days for inspections is preferable. 7 days is becoming the norm
• Note that usual turn around time for contract to be returned from Seller/Lender may be 3-10 days. Upon receipt of the formal and written acceptance from Seller/Lender, the Listing Agent will change status of property from "Active" to "Pending"
• Start the loan process and order inspections upon verbal acceptance from Seller/Lender in order to meet your contingency periods for loan approval and buyer investigation.
• Provide agent visual inspection/observation
• Always check with listing agent regarding commissions. Posted commission is based on net of seller concessions if any, from gross sales price.

DON'Ts

• Avoid writing significantly low offers. Everyone wants a good deal, but unless the Buyer can document why Seller should take significantly less than asking price (i.e., contractors provide estimates of repairs, etc), don't submit this type of offer
• Don't change lenders, loan terms or programs during escrow. No surprises. Changes could delay process and subject Buyer to per diem penalty or even lose initial deposit/earnest/binder money.
• Don't enter name(s) of Seller on any documents. Tax records do not always reflect the current seller on record.
• Don't ask for credits or repairs. Normally, property is sold AS IS. If there is a health and safety concern, this may be an exception.

If anyone has more thoughts to share/add, by all means, let's expand this list!

Sometime back, I was successful in posting some pictures of my beloved city, Alameda CA

Now that we've "claimed" or sponsored communities, I am inspired to tote my camera more frequently so that I can post additional pictures.

But once I logged on, I realized after clicking here and there. that we don't have an intuitive method to post pictures.

Okay...maybe it's just me. I've forgotten how. Or I am just too blind to see what may be obvious to a lot of people. But shouldn't we have some kind of very visible instruction like "Click here to load pictures" or something like that for realtors like me whose mind gets fuzzy late into the night?

Anyway, here are a couple of pictures I intended to post.

This one is a typical clear day in Alameda, while fog banks begin to unfold in San Francisco.

And I'm not sure what to make of Alameda Theater....I think interior shots of the restored theater may be more interesting than the exterior.

Venting....can't believe the attitude of some of the REO agents who must be so drunk with power and so busy with their listings that they have forgotten the simple rules of courtesy and professionalism.

My clients and I went to see an REO house, but when I opened the lockbox, there was no key. So on Tuesday and Wednesday. I called the listing agent named Jerry and left messages about the absence of a key. I even followed up with two emails, asking when can we see it.

On Thursday, I reached his partner Val. I told him I haven't had a call back from Jerry. Val tells me he hasn't seen Jerry in over a week. So I told him about trying to show their co-listed property but that there is no key in the lock box. Val asks, "So what do you want me to do about it?" Well, for starters, how about putting in a key?

So Val says he will get a key there either Friday or Saturday. Saturday, no key. Sunday, no key. I convinced my clients who are still very interested, to write an offer subject to inspection.

Monday, I called their office to get instructions on where/how to send the offer, and they tell me there's already a ratified offer, and that the offer was on the table for some time, but that they were waiting for the bank's response.

When I tried to voice a complaint about the unprofessional attitude, their not returning calls or emails, and their not telling me that they have an offer on the table, the assistant said she doesn't have my name on the list of people to call back. I said I left messages and also wrote emails. So the assistant puts Jerry on the phone. Jerry says, with a very dismissive attitude, "Yeah, we heard you."

And that was it.

This is not the first time I've had a run-in with an REO agent. What's with the attitude?

Keeping tabs on various blogs and websites, and I am dismayed at some of the buyers' (or perhaps) non-buyers' continuing fear that if they buy now, they may over pay for a house. Many pundits say we haven't hit the bottom of the market yet. But just when is bottom? When it's several months behind us.

A recent LA Time Article asks, "Should you buy a home now?"

I'm interested in seeing what other REALTORS say, what facts you back it up with, and how you illustrate why this is the best time to buy. How do you overcome buyer's fears?

• I've pulled up information from www.DQNews.com.
• I've given them links to, and copies of feature articles on home buying. One of my favorites is David Bach's Automatic Millionaire Homeowner (easy read, easy to understand)
• I research information on the history of the property they're interested in (like how much the home sold for last).
• I give them Home Buyer's Guide, walk them through the buying process.
• I've given them links to calculate Buy vs Rent as it applies to their situation.
• I've given charts on the 30 plus years history of the mortgage rates

What else do others do?

When Alameda Wine Company opened its doors to Alameda CA next to the historic and newly restored Alameda theater, my friends and I started going there for the wine, the cheese and the company.

Because Karen, the proprietor, was so good and so knowledgeable, I blogged about her store and posted it on Localism.

Next time I went there, she was so effusive with her thanks that she gave me a huge hug a complimentary glass of wine, and a contant flow of thanks. :)

All in a day's work as a REALTOR and blogger.

With a greeting like that, what do you think it would do to my incentive to keep going there? Don't you think I would apply that kind of greeting and thanks for clients? You betcha!

Lately, I've found myself following the comments by a local Alameda CA blogger. I have bristled more than once about his comments on the Alameda listings he chooses to critique.  Agree or disagree with his blog and opinions, from his tell-it-like-it-is-and-more school of writing, he reminded me to think carefully when posting an ad for a listing. So here are some things to remember:

• First, assume that prospective buyers and their agents will check Zillow.com for sales history of and comps for the property you're listing. So it helps to either address and pre-empt questions that may be asked if there is serious disparity.
• It may be worth it to review the elements of style by Strunk and White who offer two simple ways to add emphasis:
  1. edit out the unimportant words and/or
  2. use typographical devices like bold face, underline, or italics (even if you should avoid underlines on the Web, that's still two devices to make your text stand out)
• Don't just Capitalize words Whenever you Feel Like it
• Avoid irritating clichés and abbreviations (like OBO) 
• Avoid sales fluff. Observe truth in advertising. Like this one. :)

"Dogs attack gator!"

As a review, here's A Summary of Rules from The Elements of Style  (Source: Found on the internet, no name with the post, but appears to be a reference for a college thesis by a student at the College of New Jersey)

A Summary of Rules from The Elements of Style

Strunk's rules:

1. Form the possessive singular of nouns by adding 's.
2. In a series of three or more terms with a single conjunction, use a comma after each term except the last.
3. Enclose parenthetic expressions between commas.
4. Place a comma before a conjunction introducing an independent clause.
5. Do not join independent clauses by a comma.
6. Do not break sentences in two.
7. Use a colon after an independent clause to introduce a list of particulars, an appositive, an amplification, or an illustrative quotation.
8. Use a dash to set off an abrupt break or interruption, and to announce a long appositive or summary.
9. The number of the subject determines the number of the verb.
10. Use the proper case of pronoun.
11. A participial phrase at the beginning of a sentence must refer to the grammatical subject.
12. Choose a suitable design and hold to it.
13. Make the paragraph the unit of composition.
14. Use the active voice.
15. Put statements in positive form.
16. Use definite, specific, concrete language.
17. Omit needless words. Omit needless words. Omit needless words.
18. Avoid a succession of loose sentences.
19. Express coordinate ideas in similar form.
20. Keep related words together.
21. In summaries, keep to one tense.
22. Place the emphatic words of a sentence at the end.

White's rules:

1. Place yourself in the background.
2. Write in a way that comes naturally.
3. Work from a suitable design.
4. Write with nouns and verbs.
5. Revise and rewrite.
6. Do not overwrite.
7. Do not overstate.
8. Avoid the use of qualifiers.
9. Do not affect a breezy manner.
10. Use orthodox spelling.
11. Do not explain too much.
12. Do not construct awkward adverbs.
13. Make sure the reader knows who is speaking.
14. Avoid fancy words.
15. Do not use dialect unless your ear is good.
16. Be clear.
17. Do not inject opinion.
18. Use figures of speech sparingly.
19. Do not take shortcuts at the cost of clarity.
20. Avoid foreign languages.
21. Prefer the standard to the offbeat.
22. You may use they, them, their as the indefinite singular pronoun.
23. Avoid the indefinite singular pronoun.

For the first time, one of my short sale applications was rejected by Downey Savings whose policy is NOT to approve any short sales of any kind. Since we have until November before the house is foreclosed, I am trying to find other means to get this done. Otherwise, my clients are headed for bankruptcy or foreclosure.

I talked to Mortgage Resolution Services to recruit their help. They will charge 1/3 of my commission to do the sale. But they said getting the short sale approved by Downey is not doable. I would have gladly used them if it meant sparing my clients from the worst scenario.

So I turned to another gunslinger whose record is 100%. Here's what she said she would charge:

• Getting the bank to agree to a short sale would be considered a modification price. Price for modification on the loan amount of $600,000 is $3000.00
• But if not doing an actual modification since owners can't afford to keep the house regardless of the modification, the price will be $1500.00 of which $750.00 will be required for a deposit, before starting. The other $750.00 will be due upon completion (meaning bank agreeing to letting house go for short sale).

Has anyone else turned to such organizations for help with "not do-able" short sales. And do you have suggestions as to the deadliest short sale gunslinger around?

HELP!

To all buyers out there....

Please listen to your realtors who make a living pricing, selling, researching values of real estate property. We do have your interests at heart. We're not in it just to sell you something. We want you to be happy because we are counting on you to tell your friends, your associates to look us up when it comes time for them to buy or sell real estate, too. That's what enables us to grow our business --- referrals from satisfied clients.

So when we tell you that your offer may be too low, when we tell you what the market comps are for the property you're interested in, when we give you information on how much the property sold for last, and what the appreciation (or depreciation) rate is, please believe us.

We tell you this so to guide you and to give you the proper tools to make an informed decision.

Thus, if a property is listed at $299K --- and the comps say that this is a fair value --- just because it's a short sale or REO doesn't mean you should offer $199K!

We want you to win, to invest wisely. We don't want you to waste your time looking everywhere, finding properties you want to write an offer on, and then losing out because your offer is too low, or your terms unrealistic. When you have a number of rejected offers on properties you wish you won, then maybe it's time to re-assess.

Thanks.

Since my seller's plea for a short sale was rejected by Downey Savings who holds the first loan, I've been trying to understand why Downey would refuse. Turns out that Downey sold the note to Deutsch Bank. Negative news and forums abound about both,

• Deutsch Bank Credit Rating Cut
• Deutsh Bank Foreclosures Tossed Out of Ohio Federal Court
• Deutsch Bank Breach of Trust
• Downey Savings shares fall
• Downey Savings carrying risky loans
• Ailing Downey Savings is all shook up
• No run at Downey Savings --- yet

The point to this is......if you're talking with clients who are either trying to sell or buy a short sale but the loan is with Downey Savings, DON'T. Downey Savings won't approve short sales at this time. Save your energy and find something else.

I am not an "original" or native born Alamedan. Nor do I know everything there is to know about Alameda. But I am making an effort to get to know more about this beautiful island.

Having lived in New York, New Jersey, Florida and Texas, and having sampled living in San Francisco apartment by the marina, a virtual warehouse loft by the Oakland Estuary before it was gentrified, and in a cozy cottage in downtown Mountain View, I can say without reservation that Alameda is my favorite of all.

My quick and easy resource for what life was and is like in Alameda is our own Alameda Magazine.

I especially like it when they feature stories about the history of the city.

The January-February 2008 issue was by far the best! The cover was a picture of a lady getting ready to dive in a pool in Alameda's version of Coney Island: Neptune Beach.

• Five City Landmarks story is about five historic buildings. You can't just drive by and not wonder about the history of these beautiful structures.

• Riding the Rails when streetcars criss-crossed the city 

• Alameda theater --- its rebirth. Although not as ornate as some other theaters like the Grand Lake Theater in Oakland or as exciting as the Castro Theater in San Francisco, it's a wonderful theater in the heart of downtown. Because it's just a block away from Alameda's Kofman Auditorium, are we now to see future kleig lights at our own Alameda's Theater District? It's worth noting that the Alameda Theater is one of 12, and the last one, designed by renowned San Francisco architect Timothy Pflueger. Of the twelve, only four others besides Alameda Theater remain open.

Another recent story was From Bayfront to Lagoons which tells the fight to retain Alameda's waterfront the way it was, to its eventual result of a landfill that has since developed into several residential communities, zig-zag patterns for a lagoon to give people their waterfront views, and the shopping area now known today as the Alameda Town Centre.

In case you missed it, it's worth sharing again: the new First Time Home Buyer Tax Credit. If you're looking for reasons and benefits to share with your first time home buyers, this may help. http://www.federalhousingtaxcredit.com/

Opportunity of a Lifetime for First-Time Buyers For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime. But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity.

Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible.

Use these links to learn more about the tax credit.

• Tax Credit at a Glance
• Frequently Asked Questions
• The Law's Other Provisions

• Home Buyer Resources

Working with first time buyers today, as we must already know, is very different from what it was like just 2-3 years ago.

Yesterday, they were afraid they'll lose out by not buying a house --- any house at any rate.

Today, they're afraid they may over pay for a house if the market continues to slide, or the interest rates are too high.

For those who are concerned that the interest rates are "too high" I like to share with them this history of the 30-year mortgage. Perhaps some of us still remember when they were 18%. People literally camped overnight in front of a bank where lines snaked around the block while they were waiting to get whatever mortgage loans were available at a time. That's when people were afraid they couldn't get a mortgage because money was tight. Is this a case of "Remember when....?"

One of the most difficult and sensitive things to do during a listing presentation is to get the sellers to see and understand the proposed list price. Try as I might, it's still a careful dance especially when there are other realtors competing for the listing. We've all heard of some realtors "buying" the listing by proposing a higher list price to get the listing.

It helps to augment a marketing plan with statistics. One of the best and local resources for me is DQNews.com's report on Bay Area Home Sale Activity. Instead of generalizing figures that one reads about, this chart provides a zip code view, and thus more believable at the local level. However, it still requires a comprehensive comparable market analysis to come up with a proposed list price.

In Alameda's 94502 zip code, it shows that the median price has actually increased by 1.4% over a year ago. This won't be true for one of my clients who bought a duet for $775K two years ago, made several improvements, but whose house, if I were to list it today, would be valued at $699K --- and that's no guarantee it will sell at that price!

My broker, Michael Studebaker, uses Broker Metrics by Terradatum to get a really good grasp of the market. Here's a June 2008 report on the 2-year review of sold properties and the median price in Alameda, CA. I've included such reports in my presentations. But I am a bit hesitant to put too many statistical data in the presentation and concerned that too much market analysis results in paralysis.

There's got to be a balance between marketing panache and statistical justification. And yes, it's still a very delicate dance.

Another REALTOR, Kirk, and I were discussing the benefits of internet exposure via blogs, posts, etc. as opposed to doing open houses. Mind you, we're located in Alameda, CA, and we have very active open houses. It helps that Alameda is a small island, and it's easy for people to go from one open house to another.

Open houses open doors to new clients

Kirk is very high-tech oriented and likes working with income property investors. He had his own blogs for two years, and he writes beautifully. So I was prodding him to start blogging on Active Rain. I was surprised when he told me that even though he has spent an inordinate amount of time writing and blogging, his best sources of clients have been open houses!

Open house for Fixers draw the biggest crowds

He told me that a fixer upper duplex he held open was literally a gold mine for leads. Even when he didn't have a listing of his own, he offered to hold open houses for other agents in the office. For the first half of the year, Kirk was among the top producers (and so was I, by the way). And this month, he has a number of pending sales and other clients in the line-up. His primary source of clients? Open house!

Open house or blogging? Do both!

I must admit that I love doing open houses as well. However, my position is that we should supplement that with internet exposure ---- for example, I've had really good luck posting my listings and open houses on craigslist. And lately, I've started posting my listings on ActiveRain's MLS. Recently, I benefited by getting a new listing as a result of my ActiveRain exposure (Yeeha!).

What do other agents propose as the best way to develop a client base?

Welcome, Alameda Wine Company!

Alameda, we have arrived!

For all oenophiles in Alameda, this is wonderful news indeed!

It was a guilty pleasure to go to the Ferry Plaza Wine Merchant at the Ferry Terminal in San Francisco, but we now have our own wine bar next to the Alameda Theater. 

Today, a friend and I wanted to take a break after hours so we walked to Alameda Wine Company. That's one of the benefits of being downtown --- we walk everywhere. We were greeted by the very friendly Sal Lirosi and owner Karen Ulrich with whom we chatted up a storm. Although the Alameda Wine Company has been open only for about 18 days, they said they have a very steady stream of people who come before going to the movies, and end up skipping the movies and staying at the wine place instead.

Tonight, I picked the Malbec (this particular vintner is from Argentina). Fabulous!

Oh yes, did I mention that there are several choices of snacks to complement your wine? Pick the cheese....

Karen was opening several wheels of cheese most of which will be served by tonight. There are so many selections that this is as much a cheese tasting as it is wine tasting. As Karen was cutting the wheels, she would slice a piece for the three of us who were lucky enough to be sitting at the bar. There was one particular cheese with mustard seed that was incredibly yummy.

Note their latest newsletter

• Saturday Tastings of the latest and greatest in stock. $6 buys six one-ounce tastes and "stalwart and savory nibbles". 11:00 am - 5:00 pm.
• Sunday Tastings. According to their newsletter. Karen pairs the best tunes of that most introspective, moody juazz artist, Miles Davis, with the favorite, philosophical grape of Mile of "Sideways" movie fame, Pinot Noir. Karen is offering three unique examples of the variety from different parts of the globe, and she will give a 15% discount on her usual by the glass price that day.

Because we came early, there were only a few of us there....but gosh, it felt like a party because we were all talking with each other, raving about the wines and the cheese that we were enjoying. Alameda Wine Company is going to be a favorite destination.